Correlation Between Evolve Canadian and Evolve Active

Can any of the company-specific risk be diversified away by investing in both Evolve Canadian and Evolve Active at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Evolve Canadian and Evolve Active into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Evolve Canadian Banks and Evolve Active Core, you can compare the effects of market volatilities on Evolve Canadian and Evolve Active and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Evolve Canadian with a short position of Evolve Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolve Canadian and Evolve Active.

Diversification Opportunities for Evolve Canadian and Evolve Active

0.37

Correlation Coefficient

Evolve Canadian  Evolve Active

Weak diversification

The 3 months correlation between Evolve and Evolve is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Evolve Canadian Banks and Evolve Active Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolve Active Core and Evolve Canadian is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Evolve Canadian Banks are associated (or correlated) with Evolve Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolve Active Core has no effect on the direction of Evolve Canadian i.e., Evolve Canadian and Evolve Active go up and down completely randomly.

Pair Corralation between Evolve Canadian and Evolve Active

Assuming the 90 days trading horizon Evolve Canadian Banks is expected to under-perform the Evolve Active. In addition to that, Evolve Canadian is 1.97 times more volatile than Evolve Active Core. It trades about -0.04 of its total potential returns per unit of risk. Evolve Active Core is currently generating about 0.03 per unit of volatility. If you would invest  1,821  in Evolve Active Core on December 1, 2024 and sell it today you would earn a total of  13.00  from holding Evolve Active Core or generate 0.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Evolve Canadian Banks  vs.  Evolve Active Core

Evolve Canadian Banks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Evolve Canadian Banks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Evolve Canadian is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Evolve Active Core

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Evolve Active Core are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Evolve Active is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Evolve Canadian and Evolve Active

The main advantage of trading using opposite Evolve Canadian and Evolve Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolve Canadian position performs unexpectedly, Evolve Active can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Evolve Active will offset losses from the drop in Evolve Active's long position.

The idea behind Evolve Canadian Banks and Evolve Active Core pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.